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🔁 Restaking

Last verified: July 2026

Restaking lets ETH that's already staked take on an extra job — securing additional services for extra rewards, at the cost of extra risk. It's one of the largest sources of on-chain yield today. Here's what it actually means.

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The idea in one line

Normally, staked ETH does one job: securing Ethereum. Restaking lets that same staked ETH take on additional jobs — securing other protocols and services too — in exchange for extra rewards. The pioneer and by far the largest platform for this is EigenLayer, which by 2026 holds tens of billions of dollars in restaked value and is considered one of the largest systems in all of DeFi.

How restaking reuses the same staked ETH to secure multiple services A single deposit of staked ETH first secures Ethereum, then is opted in to also secure additional services, each paying extra rewards but adding extra slashing risk. 🔒 Your staked ETH ETHEREUM Base staking reward ~3-4% yield AVS #1 e.g. a data layer extra reward, extra risk AVS #2 e.g. a bridge or oracle extra reward, extra risk One deposit, multiple jobs — and multiple ways to be penalised. AVS = "Actively Validated Service" — a protocol renting your stake's security.

What actually needs "renting" security?

New blockchain services — oracles, bridges, data-availability layers, and other infrastructure — need their own security to make sure participants behave honestly. Building that from scratch normally means recruiting a brand-new set of validators, which is slow and expensive. EigenLayer's insight: Ethereum already has an enormous, trusted pool of staked capital. Why not let new services "rent" some of that existing security instead of bootstrapping their own? These services are called AVSs — Actively Validated Services.

How restaking actually works

A staker (or someone holding a liquid staking token like stETH) opts in to EigenLayer and delegates their stake to an operator. That operator chooses which AVSs to support. Each AVS has its own rules — and its own slashing conditions. Behave honestly, and the restaker earns rewards from both Ethereum and the AVS. Misbehave — or delegate to an operator who does — and the restaker can be slashed on both. Withdrawals aren't instant either; exiting a restaking position involves a waiting period, similar to regular staking but often longer.

Liquid restaking tokens (LRTs)

Most people don't restake directly — they use a liquid restaking token instead, issued by protocols like ether.fi, Renzo, or Puffer. Deposit ETH or an LST, receive an LRT (like eETH or rsETH) in return, and that token represents your restaked position while staying usable elsewhere in DeFi — tradeable, lendable, or usable as collateral, without needing to unstake first. The trade-off: you're now trusting the LRT protocol's choice of operators and AVSs on top of everything else, and during stressful markets an LRT can trade below the value of what it actually represents.

Why the extra yield exists — and why it isn't free

Base Ethereum staking pays roughly 3-4% a year. Restaking through EigenLayer can add another 1-3%, funded by the fees AVSs pay for security — plus, especially in 2026, additional token incentives some protocols hand out to attract deposits early. The honest way to think about it: each AVS you back adds a reward stream and a matching new way to lose part of your stake. More yield always means more ways to be penalised, not a free lunch.

The real risks

Restaking stacks several risks on top of ordinary staking. Slashing risk — an AVS's rules are stricter, and misbehaviour (yours or your delegated operator's) can cost you. Operator risk — you're trusting whoever you delegate to. Smart contract risk — EigenLayer, the AVSs, and any LRT protocol you use are all more code that can contain bugs; a major exploit in 2026 was a reminder of this. Liquidity risk — LRTs can depeg from their underlying value during stress, and exits from restaking are not instant. None of this makes restaking bad — it makes it a genuinely more advanced, higher-risk activity than plain staking, and worth approaching only once you understand plain staking well.

The India tax angle

Restaking rewards are, like regular staking rewards, likely treated as taxable income at the point you receive them, with the usual 30% rule applying again if you later sell at a gain. Liquid restaking tokens are themselves Virtual Digital Assets, so swapping into or out of one is its own taxable event. Given how many moving parts restaking involves, keeping detailed records from day one matters even more here than with simple staking.